Deloitte has resigned as auditor of Linklaters after the firms became embroiled in a tax advice row over the sale of a major stake of Arsenal.

PwC has been selected to take over as the magic circle firm’s auditor after Deloitte stepped away due to the conflict of interest.

Friction between Deloitte and Linklaters began last year when major Arsenal stakeholder Lady Nina Bracewell-Smith filed a lawsuit against both firms for “professional negligence”, after she employed their services to advise on selling her 15.9% share of the club to majority shareholder Stan Kroenke in 2011.

Bracewell-Smith accused the firms of negligent advice which led to loan notes being sited in the UK rather than overseas, making her liable for capital gains tax in the UK and leading to losses of £10m. She added that the error forced her to move to Monaco at the cost of £1.25m.

Both Deloitte and Linklaters pointed fingers at one another in court documents at the time. Linklaters said that responsibility of the tax aspects of the deal fell to Deloitte and Bracewell-Smith, while Deloitte countered that it did not know where the loan notes would be sited and “did not have any duty to check.”